The Slovak business environment faces several challenges, one of which is the fact that Slovak governments have long viewed the sector as a source of taxes, not as a source of wealth for the country, Economic and Social Studies Institute (INESS) analyst Radovan Durana told TASR, adding that he sees the approved consolidation package as one of the most significant measures of this year in the context of assessing the direction of the domestic economy this year.
"This can be seen in a disproportionate bureaucratic burden or frequent changes in legislation. The latest is the consolidation package. It has indirectly helped entrepreneurs, because it is very likely to prevent a significant increase in the risk premium on government bonds, which is also reflected in the cost of financing Slovak companies. However, consolidation will not happen by streamlining public spending. On the contrary. It will increase the tax burden on businesses by more than €1 billion," said the analyst.
Durana also drew attention to the fact that the new tax on financial transactions will also have to be paid by companies that are making a loss. The amount spent on the new tax will reduce the companies' resources for investment, which will be reflected in slower economic growth in the coming years, he added. Thus, the economy is expected to grow at a slower rate of 0.5 percent compared to if the state consolidates by cutting its own spending, he said.
"As a result, the government sacrifices wealth creation in order to subsidise energy consumption across the board or to provide a 13th pension to pensioners across the board. The consolidation package will thus be the most significant negative factor for the economy next year. Employees will also pay the price with slower growth of their salaries," noted Durana.
Source: TASR
